By Hiroyuki Kachi and James Glynn
The dollar fell against the yen and euro during early Asian trade Thursday, amplifying overnight weakness following Federal Reserve minutes that signaled uncertainty over the policy direction of President-elect Donald Trump's incoming administration.
The dollar tumbled 0.8% against the yen and 0.5% against the euro, with the sharpest moves following the main start of bond and equity trading in Tokyo.
The WSJ Dollar Index, a measure of the U.S. dollar against a basket of major currencies, was down 0.25% at 92.72.
The U.S. currency came under pressure overnight after minutes from the Fed's Dec. 13-14 meeting showed central bankers grappling with "considerable uncertainty" about the new U.S. administration's possible impact on the economy.
Fed debate on the potential impact of a Trump fiscal stimulus suggests Fed policy may be tighter than expected in 2017--a view that fits in with a sustained rally in the dollar since Mr. Trump's election victory. But the market appears to have focused on the "considerable uncertainty" comment, driving U.S. bond yields and the U.S. dollar lower overnight, said Rodrigo Catril, currency strategist at National Australia Bank.
The morning's sharp move in the U.S. dollar appears to have been triggered by a drop in U.S. 10-year bond yields at the Tokyo open, Mr. Catril said. A move lower in U.S. yields is driving the U.S. dollar lower across the board with the yen leading the way, he added.
Stop-loss orders gave an extra slide to the downward movement, pushing the dollar down to Y116.30, its lowest level since Dec. 30 around 0055 GMT before it slightly regained ground to Y116.45 around 0230 GMT. That compared with Y117.24 late Wednesday in New York.
The greenback was also lower against other currencies, with the euro rising to $1.0542 in early morning trade, compared with $1.0489 late Wednesday. The dollar was also weaker against peers such as the Chinese yuan and Singapore dollar.
"Recent dollar-buying is taking a breather," said Daiwa Securities senior FX strategist Yukio Ishizuki, suggesting that the Fed comments may be providing traders with a chance to peg back their bullish stance on the dollar ahead of U.S. jobs data later in the week.
While dip-buying may help support the dollar's downside, "I don't think investors will aggressively take new positions" ahead of the jobs data, Mr. Ishizuki added.
In other currency trade, the euro was at Y122.52 from Y123.01 late Wednesday.
Interbank Foreign Exchange Rates At 20:50 EST / 0150 GMT
Latest Previous %Chg Daily Daily %Chg
Dollar Rates Close High Low 12/31
USD/JPY Japan 116.55-56 117.25-26 -0.59 117.43 116.31 -0.38
EUR/USD Euro 1.0519-22 1.0488-91 +0.30 1.0542 1.0481 +0.01
GBP/USD U.K. 1.2328-30 1.2320-22 +0.06 1.2349 1.2316 -0.13
USD/CHF Switzerland 1.0193-97 1.0207-11 -0.14 1.0221 1.0168 +0.06
USD/CAD Canada 1.3290-95 1.3300-05 -0.08 1.3314 1.3276 -1.11
AUD/USD Australia 0.7282-86 0.7281-85 +0.01 0.7303 0.7273 +1.14
NZD/USD New Zealand 0.6975-81 0.6965-71 +0.14 0.6999 0.6955 +0.77
EUR/JPY Japan 122.60-64 122.97-03 -0.30 123.13 122.48 -0.39
Source: Tullett Prebon
Write to Hiroyuki Kachi at firstname.lastname@example.org and James Glynn at email@example.com.
(END) Dow Jones NewswiresJanuary 04, 2017 21:56 ET (02:56 GMT)
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